Pegged Pool

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What is a Pegged Pool

Anchor Coins are a large class of assets that anchor their price to a certain target through various mechanisms. For example, USDT, USDC, BUSD, DAI are all anchored to USD; WBTC, RENBTC are all anchored to Bitcoin. The prices between similarly anchored coins are very stable and usually stay around 1. If a curve can be defined that concentrates liquidity at price 1, which fits the anchor coin market pattern, it can provide very sufficient liquidity support.

Defining Curves with PMM

The PMM algorithm can define such a curve. For example.
(The smaller this value is, the closer it is to a rigid conversion of the stablecoin) Anyone can create an anchor coin exchange pool and set the exchange ratio, slippage factor and commission rate to suit their needs.

More than just 1:1 conversions

For example, if you issue a token with an anchor of 0.1USD that is anchored at a different value than USDT, even though its exchange ratio is not 1:1. This can be defined to meet this particular anchored exchange requirement.

A great addition to your economic system

If your economic system issues its own USD stablecoin or other synthetic asset (e.g. sBTC), then it can use the anchor pool to provide liquidity to it. Compared to AMM, this curve can help your stablecoin gain 10x or even 100x more liquidity with the same TVL.

Parameters cannot be modified

The market between the anchor coin and the target token is usually very stable, and in order to give users reliable expectations, the parameters of the anchor pool cannot be changed once set. Therefore, anchor pools are dual-currency topped up and usually have no unearned losses.

Real life examples

DODO maintains an anchor coin exchange pool for DAI-USDT. This pool can often have a daily turnover rate of 50% to 100%, which is 5 to 10 times higher than competing products.
Together with ICHI, DODO issued oneDODO, a US dollar stablecoin, and created the oneDODO-USDC pool. This pool demonstrates how to build efficient liquidity for their own USD stablecoin offering.